Impulsora del Desarrollo y el Empleo en América Latina (IDEAL) has signed an agreement to sell a minority stake in Pacifico Sur toll road owner Guadalajara-Tepic highway concession (CAGT) to Canada Pension Plan Investment Board (CPPIB) and Ontario Teachers’ Pension Plan.

CAGT is the concessionaire of the 309km-long Pacifico Sur toll road in Mexico.

Under the agreement, CPPIB and Ontario Teachers’ will acquire 49% minority ownership in CAGT.

Of the total 49%, CPPIB will own a 29% stake and Ontario Teachers will own the remaining 20% stake. IDEAL will retain 51% ownership in the project.

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The agreement is an extension to the partnership signed in 2016.

CPPIB and Ontario Teachers will initially pay C$314m ($244.63m) followed by a second payment of C$218m ($169.81m).

“Pacifico Sur toll road offers CPPIB a resilient income stream underpinned by a highly diversified traffic base and a strategic location within the country.”

CPPIB Infrastructure head and managing director Scott Lawrence said: “Pacifico Sur toll road offers CPPIB a resilient income stream underpinned by a highly diversified traffic base and a strategic location within the country.

“Broadening our partnership alongside IDEAL and Ontario Teachers with our second investment in Mexican infrastructure supports our long-term objective to invest in infrastructure assets that provide essential services.”

The toll road connects Mexico’s central valley covering the north-west region of the country. It is a critical link between Guadalajara and Tepic for both commercial transport vehicles and tourism-driven light traffic.

Its extension also includes two bypasses that were recently opened around the two cities.

The concession agreement for Pacifico Sur has 23 years remaining and may be extended for up to 30 additional years.

The transaction is subject to customary closing conditions.